12/22/2003 @ 12:00AM

Raising the Curtain

A cable executive bets the long-suffering Hungarian wine industry can break through in the U.S.

In the cellar of his refurbished villa overlooking the Danube, cable executive Nimrod Kovács urges his guests to compare a bottle of Shafer Napa Valley cabernet sauvignon with a boutique Hungarian produced by his three-year-old Monarchia Wines. But before he can get any opinions, he’s off upstairs to welcome another batch of guests and government officials and to promote his wines to a local television news crew. All have come to witness Kovács, 54, unveil his lineup in a bid for the hearts of American wine consumers.

Convincing wine-drinkers is harder than his day job as chairman of the central Europe group for United Pan-Europe Communications, an arm of John Malone’s U.S-based Liberty Media. If consumers abroad think of Hungarian wine at all, it’s of nearly undrinkable Bull’s Blood blends from the Cold War era. Years of Soviet domination ravaged the once-respected Hungarian wine industry. Vineyards were adapted for other uses, and what was left was set to producing mass quantities of harsh reds and pallid whites for export to Russia, Poland and elsewhere in the Eastern bloc. “There were two kinds of vines under the Communists: There were, or there weren’t,” quips winemaker Istvan Szepsy, whose wines Monarchia distributes in Hungary.

Kovács is helping lead the long march back to respectability. “Regardless of price, there are some superb wines being made–and not just by Monarchia,” notes Jordan Simon, editor-in-chief of Wine Country International.

For 2003, Kovács says, Monarchia will generate $1.6 million in sales and be operationally profitable. In the U.S., where imports began in July, case volume will be 2,500. “We can’t compete with Australia and Chile on volume,” he acknowledges. Instead, “We want to conquer the world with quality.” In the U.S. Monarchia’s 16-wine range starts at $13 for a pinot gris to $100 and above. At the exclusive end of Kovács’ stable of winemakers is Zoltan Demeter, who makes fewer than 60 cases of his top-end Tokaji Aszu dessert wine, a gem whose complex flavors of apricots and honey help erase the memory of mass-produced, oxidized Tokaji made under the Communists. Demeter has an exclusive relationship with unlisted Monarchia, which both produces and exports wine to the U.S. Kovács will establish his own vineyards and winery near the famous wine town of Eger in 2004.

The U.S. is a natural focus for Kovács. He fled Hungary when he was 18, swimming the Adriatic to Trieste, and ended up in Colorado, where he still maintains a home. There he entered into the cable business, which eventually took him back to eastern Europe.

He’s not the first to bring Hungarian wine to the U.S. Once Communism fell, billionaire Ronald Lauder brought in small amounts after buying vineyards in Eger and Mád with restaurateur George Lang. But Kovács has ignited new interest, especially since the U.K. market, which once held promise, has stagnated and few consumers will pay above £3 a bottle. That’s led volume producers like Hilltop Neszmély, which churns out 700,000 cases a year, to refocus on the U.S., at $8 a bottle and up. Wine giant Kobrand plans to import wines from winemaker Tibor Gal (who also makes Lauder’s wines), while companies like German-owned Gróf Degenfeld have also started making inroads into the U.S. But it’s early. In 2002 a mere $2.1 million of Hungarian wine made it into the U.S.

Kovács has found success giving wines names pronounceable by U.S. consumers, like Rhapsody in Red, a blend of cabernet sauvignon, kékfrankos and kékmedoc. But he knows the distinctions can make the difference. “In order to be a global company, we need to be able to put something on the table that you can’t get anywhere else,” says Kovács. Just not Bull’s Blood.